The rich strike back — What the Fed will do — Economic hope springs eternal

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THE RICH STRIKE BACK — POLITICO’s Ben White and Maggie Haberman in a new piece up this a.m.: “Just a few months ago, it looked like 2014 would be the year of the populist, with Democrats running on economic inequality, tea party Republicans bashing banks and newly minted New York City Mayor Bill de Blasio pledging to soak the rich with higher taxes. … That was so January. The terrain is now shifting fast as the 1 percent fights back hard and the effectiveness of the populist approach comes into question. Fresh off a bruising loss in Florida, the Democratic playbook for the midterms appears in need of a major rewrite — and the pro-business wing of the party is ready to draw up new plans.

“President Barack Obama in his budget once again floated a plan to raise taxes on Wall Street, but no one took it seriously. And just days later, the president was raising money at the home of one of the wealthiest private equity executives in New York. Mayor de Blasio’s hopes to increase taxes on the wealthiest got blown out by Wall Street’s newest hero, New York Democratic Gov. Andrew Cuomo. And de Blasio is facing major heat from the rich over his opposition to charter schools."

WEALTHY STILL WORRIED BUT FEELING BETTER — “In two-dozen interviews, the denizens of Wall Street and wealthy precincts around the nation said they are still plenty worried about the shift in tone toward top earners and the popularity of class-based appeals. On the right, the rise of populists including Kentucky Sen. Rand Paul and Texas Sen. Ted Cruz still makes wealthy donors eyeing 2016 uncomfortable. But wealthy Republicans … also say they see signs that the political zeitgeist may be shifting back their way and hope the trend continues. …

“‘I hope it’s not working,’ Ken Langone, the billionaire co-founder of Home Depot and major GOP donor, said of populist political appeals. ‘Because if you go back to 1933, with different words, this is what Hitler was saying in Germany. You don’t survive as a society if you encourage and thrive on envy or jealousy.’

Langone’s comments — sure to draw ire from those who find such comparisons to Nazi Germany insensitive — echo previous remarks from venture capitalist Tom Perkins, who likened the actions of some in the Occupy Wall Street movement to the Kristallnacht attacks on Jews in 1938. Perkins gave several interviews after the ensuing uproar, but he never really backed away from the comparison. And Langone showed no hesitancy in invoking the Nazis when describing current populist rhetoric.”

DEMS SEEK NEW PLAYBOOK — “The Democratic power elite now believe that appeals to raise the minimum wage and extend unemployment insurance are not enough to overcome Obama’s deep unpopularity and frustration with the president’s signature health care law. They fear that unless Democrats shift footing to a more hopeful, growth-based message, the party could lose the Senate and drop double-digit seats in the House. ‘Reducing inequality is good, but it’s 50 times better to do it by lifting those up who are low than by tearing those down who are high,’ said Larry Summers, the former Treasury secretary whose bid to become Fed Chair got derailed by the more liberal wing of the Democratic Party. ‘The politics of envy are the wrong politics in America. The better politics are the politics of inclusion where everyone shares in economic growth.’

“Democratic Rep. Jim Himes, whose Connecticut district includes many wealthy Wall Street executives, said the populism associated with de Blasio and Massachusetts Democratic Sen. Elizabeth Warren was never as dominant as the media suggested. ‘All too often people forget that this is just one politician from Massachusetts and one from New York City and what they say is not going to dominate politics in Arkansas, or Florida or Texas or anywhere else,’ Himes said. ‘Income distribution may be far from ideal, but people don’t necessarily only want to hear about increased taxes on the wealthy.’” Lots more in the full story:http://politico.pro/1nAbBUA

WHAT THE FED WILL DO, IN ONE PARAGRAPH — Mohamed El-Erian writes on BusinessInsider on the FOMC meeting that starts today: “Absent some major economic acceleration or deceleration — and, I stress, it has to be major, one way or the other — the FOMC is essentially on automatic pilot for 2014. Specifically, the Fed will: Leave policy rates as is;Continue to taper in a gradual fashion with a view to fully exiting QE3 by the end of the year; and evolve and strengthen its forward policy guidance.” http://read.bi/1dilWef

ECONOMIC HOPE SPRINGS ETERNAL — Morgan Stanley research report from Vincent Reinhart, Ellen Zentner, Ted Wieseman, Dane M. Vrabac and John Abraham: “The harsh winter weather in the US has been hard to bear and obscures near-term economic trends. Smoothing through these effects, we believe that domestic spending retains vigor underneath the recent crust of ice. After Q1, the economy should rebound like an uncoiling spring on the expression of pent-up demand. Over our forecast horizon, real GDP expands at a 2.7 percent pace this year … and only a touch slower in 2015.”

EINHORN VS THE BLOGGER — NYT’s Andrew Ross Sorkin: “Who was the leaker? That is what David Einhorn, the outspoken hedge fund manager, wanted to know after one of his firm’s investments was disclosed by an anonymous blogger last year. Mr. Einhorn was so irate about the leak of his investment — a stake in Micron Technology — that he has gone to court in hopes of unmasking the blogger. …

“Mr. Einhorn’s firm, Greenlight Capital, asked a court to force Seeking Alpha — the website that published the anonymous blog post — to identify the writer by name so that, as the firm argued in its legal brief, it ‘can sue the pseudonymous poster under his or her real name.’” http://nyti.ms/1eMV8D9

ROMNEY ON OBAMA AND UKRAINE — Mitt Romney writes in a WSJ op-ed: “Why are there no good choices? From Crimea to North Korea, from Syria to Egypt, and from Iraq to Afghanistan, America apparently has no good options. If possession is nine-tenths of the law, Russia owns Crimea and all we can do is sanction and disinvite — and wring our hands. … Our tough talk about a red line in Syria prompted Vladimir Putin's sleight of hand, leaving the chemicals and killings much as they were. We say Bashar Assad must go, but aligning with his al Qaeda-backed opposition is an unacceptable option. … Why, across the world, are America's hands so tied? …

“A large part of the answer is our leader's terrible timing. In virtually every foreign-affairs crisis we have faced these past five years, there was a point when America had good choices and good options. There was a juncture when America had the potential to influence events. But we failed to act at the propitious point; that moment having passed, we were left without acceptable options.” http://on.wsj.com/1fUCX2I

SHARES RECOVER — Bloomberg: “Asian stocks rose, with the regional gauge rebounding from a five-week low, as data showing an improvement in U.S. factory output boosted optimism in the world’s biggest economy. … Industrial production in the U.S. rose in February by the most in six months, indicating a recovery from severe winter weather, according to the Federal Reserve, which is starting a two-day monetary policy meeting today … The Fed … will further scale back its bond-buying program at the meeting, reducing purchases for the third time by $10 billion to a $55 billion monthly rate, according to 54 economists surveyed by Bloomberg from March 14-17." http://bloom.bg/NpQEet

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THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Zachary Warmbrodt what CFTC rules the agency may revisit … Pro's subscriber-only coverage — and to get Morning Money every day before 6 a.m. — [http://goo.gl/xUNwVM] please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD TUESDAY MORNING — Among the many questions about missing flight MH370 is why no passengers used their cell phones. Slate has some possible answers. http://slate.me/1gHOcYq

DRIVING THE DAY — FOMC begins its two-day policy meeting … VP Biden is in Poland and Lithuania to meet with senior government officials and show solidarity in light of Russia’s recent moves in Ukraine … Consumer prices at 8:30 a.m. expected to rise 0.1 percent headline and core … Housing starts at 8:30 a.m. expected to rise to 913K from 880K … The President this afternoon plans to award 24 Army veterans the Medal of Honor for conspicuous gallantry … In the evening, the president attends a DNC fundraiser in DC … Illinois holds primary elections.

ALSO TODAY: CEO SURVEY RESULTS — Per BusinessRoundtable: “Today at a 10am briefing, Business Roundtable will release its latest quarterly CEO Economic Outlook Survey, which takes the temperature of CEOs on their expectations for sales, capital spending and hiring for the next six months, as well as GDP growth for 2014. Results will also highlight the impacts to hiring and investment that the CEOs see from tax, immigration and regulatory reform and trade expansion.”

HOT CLICK: THE MAX (BAUCUS) FACTOR — Reuters BreakingViews’ John Foley, Beijing columnist, spent a week in New York and DC and concluded the U.S.’s new China Ambassador, Max Baucus “may be well placed to prize open new trade agreements that would leave both sides better off.” http://reut.rs/1fUzcuc

PUTIN IGNORES OBAMA — POLITICO’s Edward-Isaac Dovere: “Obama’s incremental strategy on the Ukraine crisis marched forward … but so did Russian President Vladimir Putin, without appearing to notice. Through targeting the bank accounts of 11 Russian and Ukrainian government and business leaders, the administration hopes the pressure on the so-called ‘cronies’ … will get through to Putin himself. But though the sanctions are the most aggressive any American president has taken against Russia since the end of the Cold War, they’re going to take a while to be felt, and even then, it’s an open question of how much the people targeted by them will care.

“White House officials haven’t laid out what happens if Putin doesn’t back down — and the options aren’t great. … Russian oligarchs, after all, aren’t your standard captains of industry. … [S]o far, despite all the tough talk and long phone calls between Obama and Putin, the Russians have proceeded exactly as they said they would, despite multiple explicit warnings from America and its allies: Troops came to Crimea and stayed. A referendum was announced and held. Putin formally recognized Crimea as a sovereign state … and seems set to go through with Tuesday plans to address the Russian Duma, where he is expected to urge them to accept widely-ridiculed results from Sunday’s vote." http://bit.ly/1d8CKtC

IS CRIMEA GONE FOR GOOD? — FT’s Christian Oliver in Brussels, Geoff Dyer in Washington and Neil Buckley in London: “[Monday] marked a further step towards full annexation of the Black Sea peninsula ahead of a speech by Mr Putin to Russia’s parliament [today] where he is expected to explain Moscow’s plans for the region. … How much scope remains for diplomacy — and how quickly tougher international sanctions will be adopted — may depend on whether and how quickly Russia proceeds with absorbing Crimea into the Russian Federation. After Mr Putin’s recognition of its independence, that process could theoretically be completed within days if Moscow chose to fast-track it.” http://on.ft.com/1meMkhd

SHOULD THE U.S. AND EUROPE PRESSURE INVESTORS? — NYT’s Landon Thomas Jr.: “As the United States and Europe move to punish Russia for its conduct in Ukraine … with official sanctions, a subtle approach could prove more powerful: pressuring large global investors to reduce their sizable holdings in Russia. Since central banks began injecting enormous amounts of cash into the worldwide economy in 2009, more than a quarter of a trillion dollars has flowed into the coffers of Russia Inc … Most has found its way to companies controlled by the state. Gazprom, the Russian energy giant at the heart of the evolving dispute with the West, counts the American mutual fund giants Pimco and BlackRock among its largest investors and creditors. But some analysts and economists are pushing for an end to this easy money, a move that would choke off critical funds.

“Officials are not likely to take such a major step soon — or ever. Governments are loath to interfere with the free flow of capital; the Obama administration has urged caution in pushing measures that might upset fragile markets. … Mutual funds and other institutions may, however, feel pressure behind the scenes. As issues of sovereign and corporate governance come into focus, financial specialists note that investors could take it upon themselves to reassess or reduce their exposure.” http://nyti.ms/1kYI3OE

ALSO FOR YOUR RADAR —

UNIONS PLAN MINIMUM WAGE BUS TOUR — Labor-funded group Americans United for Change this morning is announcing a “Give America a Raise” bus tour next week to push for a hike in the minimum wage to $10.10 an hour. “We’ll be kicking off the tour in Bangor, Maine on Monday, March 24 and driving throughout the country for the next two weeks. At each stop, low-wage workers will be telling their stories about why it’s so important to increase the min wage and how hard it is to get by on just $7.25 an hour.” Release: http://bit.ly/1nzw5gf

NEWSWEEK SUBJECT STRONGLY DENIES BITCOIN STORY — Per statement from Dorian Satoshi Nakamoto, via Reuters’ Felix Salmon: “I did not create, invent or otherwise work on Bitcoin. I unconditionally deny the Newsweek report. The first time I heard the term "bitcoin" was from my son in mid-February 2014. After being contacted by a reporter, my son called me and used the word, which I had never before heard. … I have not been able to find steady work as an engineer or programmer for ten years. I have worked as a laborer, polltaker, and substitute teacher. I discontinued my internet service in 2013 due to severe financial distress.

“I am trying to recover from prostate surgery in October 2012 and a stroke I suffered in October of 2013. My prospects for gainful employment has been harmed because of Newsweek's article. … This will be our last public statement on this matter. I ask that you now respect our privacy.”

COULD HE BE LYING? — LATimes’ Michael Hiltzik: “It's still possible, very marginally, that Newsweek is correct in fingering Dorian S. Nakamoto … But it's hard to imagine a more thorough and detailed denial than the one the 64-year-old Temple City man issued … Newsweek hasn't responded to Nakamoto's denial as of this writing. But one red flag we've pointed out about the original article by Leah McGrath Goodman is the wan defense of it the magazine published earlier, after its accuracy came under attack.

“The magazine, which had published the article as the cover story for its relaunch as a print magazine, didn't address the specific questions raised against the piece but instead cited its own 80-year tradition of ‘high editorial and ethical standards.’ … Goodman's original article would have to be much stronger for it to hold up in the face of Nakamoto's challenge. Unfortunately, as many critics have observed, the article was shot through with holes.” http://lat.ms/1eemFk0

** On March 19 the U.S. Chamber will host the 8th Annual Capital Markets Summit highlighting the importance of well-functioning, liquid, vibrant capital markets and asking if Dodd-Frank is working for Main Street. Consider the “Fix Add Replace” (FAR) Agenda with specific recommendations to reform the system. Today’s financial regulation is still FAR from what it needs to be. Learn how to fix (add and replace) it at the Capital Markets Summit. http://goo.gl/ugnoPo. #CCMCSummit **